HONG KONG, the Australian dollar sank to its lowest level in over two years versus the US dollar, and other commodity currencies fell as well, weighed down by concerns about slowing global economic development.
The Australian dollar fell as low as $0.6908, its lowest since July 2020, after falling 1.7 percent overnight.
“The Australian dollar is largely a risk currency, and the market has recently been more anxious about the global economic prospects, with risk aversion reflected in large drops in equities markets throughout the world. It’s not surprise that it’s suffering against that backdrop “NAB currency expert Rodrigo Catril said.
“The Australian dollar is largely a risk currency, and the market has recently been more anxious about the global economic prospects, with risk aversion reflected in large drops in equities markets throughout the world. It’s not surprise that it’s suffering against that backdrop “NAB currency expert Rodrigo Catril said.
He also stated that the Aussie’s decline below a level just above $0.70 left it vulnerable from a technical standpoint.
It was recently slightly higher at $0.6973 as risk sentiment improved somewhat in afternoon Asian trade, causing the euro to increase 0.2 percent against the dollar to $1.0575 and sterling to rise 0.34 percent to $1.2375.
The dollar index, which measures the greenback against six other currencies, fell roughly 0.2 percent to 103.57 after rising as high as 104.19 overnight, a new 20-year high.
Nonetheless, “We don’t regard the little uptick witnessed in the last few hours as promising. It’s more of a market pause after the recent sharp falls than a significant change in fundamentals indicating we’re out of the woods “Catril said.
On Monday, global stock markets took a beating, with the Nasdaq plunging more than 4% in a sell-off led by mega-cap growth firms.
Asian equities fell on Tuesday, but US stock futures rose.
The overnight words of Atlanta Fed President Raphael Bostic, who squelched rumours of a 75-basis-point rate rise at the Fed’s next meeting, also played a role in the somewhat lower dollar, leading U.S. Treasury rates to stall their upward march.
Markets have priced in a realistic likelihood of such a large rise in recent weeks.
On Tuesday, the benchmark 10-year yield briefly fell below 3% before settling at $3.058 percent.
The Japanese yen, which is sensitive to changes in US rates, was barely changed at 130.34 on Tuesday.
Meanwhile, other commodity currencies suffered as oil prices continued to plummet, falling around 1% on Tuesday after falling almost 6% the day before as coronavirus lockdowns in China, the world’s largest oil importer, fueled concerns about demand.
On Tuesday morning, the Canadian dollar fell to C$1.3037 per dollar, its lowest since November 2020, while the Norwegian crown fell to 9.7184 per dollar, its lowest since June 2020.
There was also excitement in the cryptocurrency markets, when bitcoin dipped below $30,000 for the first time since July 2021 before rebounding to trade 5% higher at roughly $31,800.
